Positive economic and housing news lifted fixed mortgage rates to their highest level in months this week.
According to Freddie Mac’s Primary Mortgage Market Survey, the average interest rate for a 30-year fixed-rate mortgage (FRM) was 3.42 (0.7 point) for the week ending January 24, up from 3.38 percent last week. The last time the average 30-year reading was this high was September 29 of last year, Freddie Mac said.
The 15-year fixed average also rose, climbing to 2.67 percent (0.7 point) from 2.66 percent previously.
Interest rates on adjustable-rate mortgages (ARMs) were stationary in the last week: The 5-year ARM averaged 2.67 percent (0.5 point), and the 1-year ARM came in at 2.57 percent (0.5 point).
Frank Nothaft, VP and chief economist for Freddie Mac, said the rise in fixed rates is unlikely to deter the housing recovery.
“Fixed mortgage rates were up slightly over the holiday week but remain highly affordable and should continue to aid in the ongoing housing recovery,” Nothaft said. “For instance, existing home sales totaled 4.65 million in 2012, showing a 9.2 percent increase over 2011 and the strongest pace in five years. In addition, the Federal Housing Finance Agency’s purchase-only house price index rose 5.7 percent over the 12 months ending in November 2012, marking the largest annual increase since June 2006.”
Bankrate also reported increases in fixed rates. The 30-year fixed average was 3.66 percent for the week, up six basis points from the previous survey. The 15-year fixed average measured 2.94 percent, up five basis points week-over-week.
Meanwhile, the 5/1 ARM declined, averaging 2.71 percent—a drop of three basis points.
“The past week saw positive reports on housing starts and a drop in weekly unemployment claims, which coupled with good news on the corporate earnings front, powered mortgage rates higher,” Bankrate said. “With the debt ceiling debate delayed, the most dire economic scenarios are all alleviated for now, which should keep a floor under bond yields and mortgage rates at least until talk of government spending cuts heats up.”
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